What is the biggest advantage of stocks to Forex? Right, the huge number of stocks that are dwarfing a few currency pairs. Stock picking is not only about picking the one with the right fundamentals or the undervalued one. A stock pick can also be solely done on technical considerations. Trend or swing trading combined with stock picking works also.
And here we get the direct comparison to a Forex robot. The robot is generally also trading purely technical.
Trend trading of stock picks can yield tremendous results, but it is well known that markets are trending only a fraction of the time. Somewhat lesser known is that they can also behave anticyclically. The price comes back more often than not.
It doesn’t have to be a clear trading range. The “anticyclical mood” of the market can be hardly visible for the human’s eye. But it can be detected mathematically that backdriving forces are dominant.
Mostly markets behave randomly. The old saying goes that markets are trending only 20%. This is, of course, a wild guess, but it leaves room for speculation that backcoming prices occupy another 20%. So, we have left 60% for random-driven market behavior.
Given that clear trends or clear ranges are easier to trade and fuzzy trends and ranges with false breakouts lead easily to heavy losses the reality looks much more harsh.
Only a few percent of the time a market is really tradeable.
That is the advantage of technical stock picks vs Forex trading. Forex adepts have mostly to fight with random. The trend stock picker conveniently makes his choice and enjoys the trend ride or the swing.
He is picking a time window when price movements look clear, either being a trend or a swing. Fundamentals can be considered also, but important is the clearness of larger chart formations, namely the trend and the swing.
Here is the master trading system plot for the technical stock picker. You, the human trader make the stock picks, while the equivalent of a Forex robot, a stock robot makes the trades.
And here is the stock robot. It is just called differently, more humbly, trading software, albeit one that mimics the human brain. Our best guest is that this neural trading machine beats most Forex robots with regard to the sophistication of its trading algo. The afterburner, however, is added by your stock picks.